We think Sunday’s statement from Spanish super bank Santander regarding the Madoff affair stands out as a piece of modern “non-communication.” It’s quite brilliant in how little it says.
Here’s it is in full, with our subtitles:
1. Optimal Investment Services (”Optimal”) is the Grupo Santander asset manager that specializes in the management of alternative investment funds and institutions. Among the institutions managed by Optimal is Optimal Multiadvisors Ireland plc (”Optimal Multiadvisors”), an alternative investment company established in Ireland and authorized by the Irish Financial Services Regulatory Authority (”IFSRA”).
Santander has rarely publicised the matter, but the bank has a Geneva-based fund of hedge funds (with a toe-curling website) which parks money in Dublin to avoid tax.
2. Optimal Multiadvisors has a subfund, called Optimal Strategic US Equity (”Optimal Strategic”). Madoff Securities was commissioned by Optimal to execute its investments within the framework Optimal established for this fund.
Part of the money in the Dublin was managed by Madoff, but we’re not telling you how much or, indeed, whether this was a hands-on-the-money or hands-off-the-money arrangement.
3. Madoff Securities is an authorized broker-dealer, registered and supervised by the SEC and is authorized as an investment advisor by the Financial Industry Regulatory Authority (”FINRA”) of the U.S.
Was…
4. The custodian of Optimal Multiadvisors and of Optimal Strategic is HSBC Institutional Trust Services (Ireland) Limited, of the HSBC Group.
HSBC may or may not hold some assets here. Either way, we’ll be suing them shortly.
5. The exposition of Grupo Santander clients in Optimal Strategic is EUR 2.33 billion, of which EUR 2.01 billion belong to institutional investors and international private banking customers. The remaining EUR 320 million, the large majority of which are structured products partially indexed to the performance of Optimal Strategic, are part of the investment portfolios of the Group private banking customers in Spain, who are qualifying investors.
Er, institutional clients and high net worths are in for €2bn, but there’s a further €320m we haven’t pinned on anyone specifically as yet. It kinda depends on how they react.
6. Grupo Santander has a proprietary position of EUR 17 million through another investment fund.
There’s more to this, but we’re not saying - possibly because we just don’t know.
7. Optimal will undertake the legal actions which may be needed to defend the interests of shareholders in the subfund.
Obligatory legal guff.
Related links:
Elementary, dear SEC - FT Alphaville
Madoff Scandal - FT.com In depth
